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A North Idaho company that makes over 62,000 American flags a year for veterans who have passed away, and those who made the ultimate sacrifice for our country, has lost a lucrative contract that kept the business afloat.

Mark Gantar is a Vietnam veteran and owner of All Seasons Apparel. Gantar is always thinking about the men who fought by his side and honors them every day by running his business.

"It was a great pride to make this flag. It's like I'm making it for the men who died with me in Vietnam," Gantar said.

He started making flags after 9/11 and for five years he's been making burial flags for the government. Gantar said his company makes 62,500 a year.

The contract with the Department of Veterans Affairs was up in May. Gantar put in another bid on it and couldn't believe what happened next.

"We were shocked; we were stunned," Gantar said.

Veterans Affairs needs over 500,000 flags a year and half of them are made by non-profit companies. The other fifty percent is up for bid. That business was set aside for service-disabled veteran-owned small businesses, like All Seasons Apparel but the North Idaho company lost.

The two companies that did win are using the same subcontractor to actually make the flags. They are service-disabled veteran-owned businesses. That subcontractor - the one actually making the flags - is not.

Veterans Affairs said that there are no restrictions on service-disabled veteran owned businesses bidding, even if they don't make the flags themselves. They just have to use a small business to make those flags, which is the case for this contract.

All Seasons Apparel protested, saying the companies that won didn't actually qualify. Their protest was struck down.

Gantar's concern now is that the responsibility to make 250,000 flags rests on one manufacturer. He says veterans like him are losing business that's personal, too. Gantar's lawyer says nothing illegal is happening, but it puts the Post Falls business in a tough position.

"It creates a huge hole in our work force and business," Gantar said.

At times, especially with a slow economy, making these flags were 100-percent of Gantar's business.

"Probably be layoffs. That's what happens when you lose business," he said.